While Chile was being welcomed with open arms into the OECD, Chavez was busy devaluing Venezuela's bolívar fuerte. The lesson is unambiguous: free markets work, while planned economies fail. The Chicago Boys – protégés of the late and great Milton Friedman – deserve a great deal of the credit. Theirs were the policies that broke through under Pinochet’s dictatorship and have been continued and extended under Socialist governments since.
Chile is ranked 10th in the 2010 Index of Economic Freedom, ahead of the UK. By these measurements, this makes it the most economically free country the South and Central America/Caribbean region. Following the recent elections, Chile is now lead by the right-wing Sebastian Piñera. He was elected on a pledge to introduce more business friendly policies – an area in which there is certainly room for improvement.
Things have been looking good for Chile for a while, as Nick Reynolds points out for an article in The Globe and Mail:
From 1914 through 1980, Chile's economy grew at an average annual rate of 0.7 per cent. Since 1981, it has grown at an average annual rate of 4.2 per cent. Before the reforms of the Chicago boys, it took Chile 70 years to double its living standard; after these reforms, it took only 17 years.
Nestled in between Libya and Burma, Venezuela is judged to be the 174th most economically free country in the world, thus 28th out of the 29 countries in the South America/Caribbean region. And with that Constitutional Referendum passing last year, as low as Venezuela currently stands, Chavez is likely to only continue drive the country further into the ground in the coming year (or decades).